Princeton's trustees have approved increases in the University's
endowment income spending that will increase grants for all students
who receive financial aid and provide all juniors and seniors on
financial aid with sufficient support to enable them to cover the cost
of an average membership contract at the eating clubs.

The trustees also approved spending increases for other initiatives in
undergraduate education, graduate education, research competitiveness
and alumni affairs.

"These additional investments in undergraduate financial aid enhance
Princeton's affordability in two respects," said President Shirley M.
Tilghman. "They provide even more grant support in what is already the
most generous financial aid program in the country, under which no
student on financial aid is required to take out a loan. They also
remove financial barriers for financial aid students who would like to
join eating clubs. I hope this additional aid will enable a wider range
of students to think about joining the clubs, thereby making them more
diverse and more fully reflective of the student body than they are
today."

Under the new policy, effective with the 2007-08 academic year, aid
levels for all juniors and seniors on financial aid will be calculated
assuming a board rate that is set at the average cost of an eating club
membership contract not including social fees, which currently is about
$2,000 higher than the University's typical meal plan ($6,300 as
compared to $4,315 for this academic year). This higher board allowance
will be included whether or not the student joins an eating club so
that juniors and seniors on financial aid who join clubs will have
sufficient support to allow them to afford club contracts while
non-club members will have the same level of support to help them cover
other expenses.

With the increased endowment spending levels the University also will
reduce by roughly $500 a year the amount that students on financial aid
are expected to earn from term-time jobs. This will result in an
increase of roughly $500 in each aid student's grant. Some 55 percent
of this year's freshman class is receiving financial aid, and the
average grant for aid students is almost
$30,000.

These spending increases follow trustee approval last June of a $25
million increase in endowment income spending that was intended to
bring spending into the lower end of the University's target range of
between 4 percent and 5 percent of the endowment's market value, a
range that was initially established almost 30 years ago. Most of that
increase was allocated to ongoing budget items that had been funded
from capital reserves, although the increases also supported
programmatic enhancements in information technology and the library.

At their recent meeting the trustees decided to expand the upper level
of the target range of endowment income spending to 5.75 percent of
market value, an adjustment that is expected to reduce the frequency
with which spending falls outside the target range and increase the
University's long-term average spending rate. "After extensive analysis
the trustees concluded that this higher ceiling would better achieve
their goal of releasing the maximum amount of spending possible while
sustaining a relatively stable spending stream and preserving the
purchasing power of the endowment in perpetuity," Tilghman said. "This
expanded range helps ensure an intergenerational neutrality in which
the benefits of the endowment to current students and future students
are roughly similar."

The recently approved spending increases are expected to be the first
of several adjustments designed to bring the spending level to 4.5
percent of market value by the start of the next academic year. While
most of the areas to be addressed later this year will support
capital-type expenditures, the most recent increases are all devoted to
high-priority programmatic initiatives.

In addition to the enhancements in undergraduate financial aid, the approved increases will support:

Expanded social, cultural, intellectual, athletic and civic engagement
programming in the residential colleges. Each college will have a
director of student life and the resources necessary to create a
vibrant social environment, develop signature social activities and
host campus-wide events.

Improvements in the quality and variety of food served in the residential colleges.

Increased funding for assistants in instruction in graduate-level courses.

Several initiatives (see separate story) that are
designed to increase the University's competitiveness for research
funds and expand its research partnerships with the corporate world.
These initiatives include the designation of a full-time dean for
research and additional staffing for the Office of Corporate and
Foundation Relations.

Several initiatives that will enhance support and
services for alumni through the Office of the Alumni Association,
including additional staffing for affinity groups, regional association
activities and alumni classes; an increase in the distribution of the
Princeton Alumni Weekly to graduate alumni; and transfer to the
University of a number of reunion expenses that are currently
underwritten by the returning classes.